Validating recent news, Apple Inc (NASDAQ: AAPL) has announced a deal to acquire majority of Intel's smartphone-modem business worth $1 billion. As part of the contract, some 2,200 Intel workers will join the iPhone maker which also received intellectual property, leases and equipment.
The move is intended to help Apple Inc. create its own microchips for its next-generation lineup of smartphone technology. Although subject to regulatory approvals and a host of other formalities, the acquisition could be sealed anytime on fourth quarter 2019.
In a statement, Apple's hardware technology senior vice president Johnny Srouji said that the company has collaborated with Intel for a good number of years, adding that taking on Intel's modem business will help fast-track "our development on future products and enable Apple to further move forward."
Srouji emphasized that the Silicon Valley tech giant is thrilled to have a lot of competent engineers in its growing smartphone business and "know they will thrive in the company's dynamic and creative environment."
The latest buyout is the second-biggest in the history of Apple after it bought popular headphone maker Beats Electronics to the tune of $3 billion in 2014.
The acquisition also confirms recent reports that Apple would buy the business so it could extricate itself from Qualcomm, which is the source of conflict for the two corporations in the last several years. Qualcomm and Apple settled their legal tussle in court in April.
Intel said the deal will allow Apple to have full ownership of more than 17,000 technology patents, while Intel will move its IP holdings to Apple. The contract will let Intel retain capacity to make non-smartphone modems for desktop computers, remote-controlled vehicles, and Internet of Things gadgets, or IoTs.
In April, Intel revealed it was abandoning its smartphone modem business because the company was shedding as much as $1 billion yearly in operational cost.
This latest tech deal with Apple Inc will enable Intel to put premium on enhancing its technology for the 5-G network while it keeps valuable intellectual property and related technology the company has developed, according to CEO Bob Swan.
The announcement of the buyout came before Intel's Q2 earnings report. The company stated that for quarter capping June, it gained $1.06 per share in stocks, on revenue of $16.51 billion. Analysts in New York had predicted the semiconductor manufacturer would generate 89 cents per share on $15.7 billion in total sales in the same period.
